I wrote this in December 2002. I think much of it, if not most of it, is spot-on. I have edited it slightly, but here's a link to the original version without edits.

One of the exercises we do I used to do on a regular basis in my old profession were frequent risk/reward analyses.

A thorough r/r analysis of the Korean crisis should include the risks and rewards, and the interests of all parties. Many of the following might seem subjective, and perhaps skewed through the eyes of someone who has lived on the peninsula. Consider this full disclosure.

More after the jump.

Continued:

There are some aggravating factors that should be taken into consideration before I proceed:

History. Korea is the Poland of North East Asia. When China and Japan fight each other they often do so in Korea.

North Korea (henceforward referred to as the DPRK) has a history of aggression and a history of not living up to its agreements. The NNPT, the MTCR and the Agreed Framework of 1994 are three good examples. The DPRK has a history of weapons proliferation, as well.

There is a large pro-DPRK population in South Korea.

China and the United States have conflicting interests in the Korean peninsula.

Finally, the Bush administration's neglect of Korea followed by its increasing aggressiveness hasn't helped the situation.

There are also a few mitigating factors that need not be overlooked:

The economic considerations of China, the United States, South Korea and Japan are all pretty much the same. What each party really wants is stability in North East Asia so they can pursue their economic interests more fully.

And of course the 37,000 U.S. troops stationed in South Korea.

So, who are the interested parties on the Korean peninsula? The obvious three are North and South Korea and the United States. China certainly has interests, as it shares a long land border with the North and fought on their behalf in the fifties. Russia is also a player, sharing a small border and a history of being the North's patron. Of course there is Japan also, as Korea was once a colony of Japan, and has been Japan and China's battleground for centuries.

And what would be DPRK's interests?

A.) Continuity of the regime.
B.) Requires economic aid and diplomatic recognition from the U.S.
C.) Wants a "declaration of no hostile intent" from the U.S.
D.) Seeks reunification and continuity of the regime.
E.) Needs security vis-a-vis China and Japan, plus the U.S.

South Korea's interests are:

A.) Security from the North
B.) Stability to maintain their economy
C.) Seeks the long-term transformation of the DPRK and eventual reunification.
D.) Security vis-a-vis China and Japan

Our interests are:

A.) Maintenance of the status-quo
B.) We seek a non-proliferating, non-nuclear DPRK.
C.) We require a buffer between Japan and China.
D.) Eventual reunification which maintains American hegemony in North East Asia (including, a non-nuclear Japan).

China's interests are as follows:

A.) Status-quo
B.) Wants to avoid a refugee crisis from the DPRK.
C.) Will not tolerate a unified Korea with large amounts of U.S. troops present.
D.) Would probably accept a unified Korea w/o U.S. troops as a buffer against Japan.
E.) Fears encirclement.
F.) Seeks a non-nuclear Japan (and possibly Korea).

Russia's interests are:

A.) A stable North East Asia that facilitates its Far East investment needs.
B.) No refugee crisis.

Japan's interests are:

A.) Status-quo
B.) Non-nuclear Korean peninsula.
C.) Buffer between it and China.
D.) Would probably accept a unified Korea, preferably with a U.S. troop presence, possibly without but would not tolerate Chinese hegemony.

Here are some of the risks the region faces. Remember: the underlying assumption here is the risks the region faces with a nuclear-armed North Korea:

1.)A Nuclear armed North Korea seriously complicates our efforts to maintain the balance of power in North East Asia. N.E. Asia becomes unstable. It might encourage Japan to rearm, possibly creating its own nuclear deterrent.
2.) North Korea is a known proliferator and will continue to spread WMD all over the globe, complicating our efforts to reduce the spread of WMD.
3.) War and economic chaos.

Here are some of the possible rewards from the DPRK's perspective:

1.) DPRK has the strategic initiative and can negotiate from strength.
2.) The United States has less leverage and North East Asia becomes more independent of us.
3.) The United States is forced to diplomatically recognize the DPRK.
4.) Reduction in the American troop presence in South Korea.
5.) The DPRK has a steady flow of hard currency from its arms sales, allowing it to mitigate its food and energy crisis.

This catalog is by no means complete or comprehensive. I believe it does go a long way towards describing the complexity of the situation. This is certainly not a list you will see in the New York Times, USA Today, the Washington Post or Time, or Newsweek, etc . . .

My point is that international affairs are never black-and-white like so many on the far Left and far Right would have you believe. There is a lot of gray area. And the gray area is usually dominated by diplomats. Something this administration is sorely lacking in.